1.3: Economic developments

How and why did the USSR seize reparations from 1945? What impact did this have on the GDR’s economy?

The USSR seiezed reperations to compensate for the immense destruction caused by the Nazi invasion and to weaken Germany economically to prevent future aggression

This slowed its recovery and created a stark economic disparity with West Germany

• Hindered Reconstruction and meant a neglect to infrastructure 

• Forced Integration

• Economic Strain and Unrest

What was the SED’s socialist idealogy around economic planning?

Social welfare schemes were encouraged in order to gain support for the regime.

A lot of the policies tended to be idealogical rather than economic in nature:

• Production prices and quantity was all centrally planned

• Targets for labour and resources

What were the advantages of a Centalised Planned Economy?

• Government could harness the economy to the needs of the state, therefore a concentration on public transport over private cars.

• Social over personal needs emphasised, items produced for the good of the community such as housing rather than consumer goods.

What were the disadvantages of a Centalised Planned Economy?

• Quantity>quality.

• Too centralised led to a reduction in innovation and creativity.

• Inefficient system, difficult to plan the needs 5 years in advance.

• Goods were produced often that weren’t needed, at the opportunity cost of those that were needed, therefore inefficiencies.

• Prices did not reflect supply and demand.

• Goods produced whether they are needed.

• Goods produced whether or not they were cost effective.

What was the role of the State Planning Commission?

They were the supreme planning authority, they drew up a series of Five-Year Plans

What was the first Five Year Plan of 1950 and what did it entail?

Aims:

• Develop heavy industry in key industries like iron and steel, energy and chemicals

• To increase living standards significantly above pre war levels

• To overtake the living standards in the FRG to make the GDR more appealing to all German workers

There were targets set to ensure an increase that the GDR needed like their national income at a 60% increase

The planners decided what should be produced, and to a large degree, how it should be done.

They didn’t care for profit motive or the workings of supply and demand

What was the second Five Year Plan of 1956 and what did it entail?

Launched with the title: ‘Modernisation, Mechanism and Automation’

The plan focused primarily on consumer goods and improving the living standards, while also including the development of nuclear energy

How successful were these Five Year Plans in developing industry?

There were increases, but based upon the projected increases the government wanted to see, it wasn’t what was wanted.

This was at the expense of their living standards and there was a constant battle between whether to produce more heavy industry or consumer goods.

What was agricultural collectivisation and how successful was it?

Agricultual collectivisation was a key component of the planning process.

The idea was that more could be achieved through large farms which could afford more machinery to operate in bigger fields and more animals → achieve more economies of scale

It was successful as the process of collectivisation soared during the years of 1959-1960, nicknamed ‘The Socialist Spring’

Later when the production was thought to not be enough as they wanted to overtake the FRG, collectivisation became more forced and led to disruption and resentment

Farmer left for the West

How did dissatisfaction about the GDR’s socialist economy contribute to the June 1953 uprising?

• Considerable opposition to socialist economics, farmers resented collectivisation and remained outside of the system for as long as possible which led to many leaving the GDR.

• 750,000 hectares unused as landowners fled.

• Removal of the profit motive led to a disincentive to innovate and take risks.

• General lack of motivation, a lot of unofficial strikes about work norms being unrealistic.

• Poor quality equipment, health and safety issues.

• Discontent continued throughout the lifetime of the GDR, although came to a head in June 1953.

• Most people in the GDR did not actively support Communism and remembered the capitalist system.

• They were slow to adapt to socialist economics because they were unused to it.

What were the long term/short term/trigger causes of the uprising?

• Public protesting

• Strikes about the working conditions and their pay → economic and social difficulties

The opposition increased build up to the uprising

• Immediate production of goods - trigger

• Social unrest - widespread surveillance → no privacy

• They resented being so heavily influenced by the Soviet Union

• They used Stalin’s death and the political instability that came from that to gain control

What were the main events of the uprising?

When the revolt began it was about living and working conditions and in particular the hated work norms. In the GDR, the work norms, which were the biggest bone of contention among most people, remained in force.

In protest there were strikes and demonstrations both in towns and the countryside and calls for the government to resign.

• In Berlin on the 16th June, building workers in the Stalinallee Project, a residential building project, went on strike and marched to SED headquarters demanding to speak to Pieck and Grotewohl.

• By the time of their arrival the protestors’ numbers had swelled to 2000.

• In the face of government intransigence they called for a general strike the next day – 17th June.

• On the 17th, 25,000 or more converged on the Council of Ministers headquarters and their demands widened to include free elections and the resignation of the government.

Why did the uprising fail?

• Disorganised leadership, they lacked preparation, it was very spontaneous

  • There was no clear goal

• Not entirely supported by the population which meant it had limited support (even from the West)

• Surveillance → meant there was internal infiltration and spread news so that the government was ready

How was the uprising brought under control and what was the impact of the uprising?

• USSR troops were deployed to help the GDR authorities restore order.

• Resulted in the deaths of 50 East Germans, although it could’ve been more.

• Point was that the swift Russian response ended the protests before they got out of hand.